Guthard v. Guthard, 942 N.W.2d 792

Jennifer and Joel Guthard divorced in 2004; Jennifer received custody and Joel was ordered to pay $1,137/month child support based on a $69,000 earning capacity for Joel.
Joel co-owns (50%) GAS Electrical Services, Inc., an S corporation, and took an annual salary of $65,000 at trial (2016–2017); he also received K-1 pass-through income reports showing large S-corp taxable income in 2016 (~$381,182 his share) with distributions (~$137,625).
Jennifer filed a counterclaim in the 2016 modification action seeking an upward modification of Joel’s child support, arguing inclusion of (a) the S-corp’s retained/nonpassive income, (b) distributions and in-kind benefits from GAS Electrical, and (c) rental income from a second entity (SnyGut).
At the 2018 trial, the court heard Joel’s testimony and his personal tax returns/K-1s; no corporate tax returns, financial statements, or corporate witnesses were produced; K-1s for 2014–2015 were missing.
The district court declined to include retained S-corp earnings, distributions, in-kind benefits, or unproven rental income in Joel’s income because Jennifer failed to prove retained earnings were excessive or distributions exceeded tax liabilities or that in-kind/rental amounts were non‑speculative.
The Court of Appeals affirmed, holding the evidence was insufficient to overcome the presumption; only Joel’s $65,000 salary could be included, which did not justify an upward modification.

Issue	Jennifer's Argument	Joel's Argument	Held
Whether undistributed S-corp (retained) earnings should be included as Joel's income	Retained pass-through earnings are excessive/being sheltered and thus should be included	Retained earnings were kept for legitimate business needs; no proof they were excessive	Not included—moving party failed to prove retained earnings were presumptively excessive or distributable
Whether distributions (K-1 amounts) should be counted where used to pay shareholder tax estimates	Distributions (including 2016) reflect available income and should be included/averaged	Distributions were made to cover Joel’s proportionate tax liability on pass-through income	Not included—distributions intended to cover tax liability are excluded unless they exceed correlated tax liability; record lacked breakdown and multi-year data
Whether employer-provided in-kind benefits (vehicle, phone, insurance) should be added to income	In-kind benefits effectively increase Joel’s living standard and should be added	Benefits were not quantified and are typical employer-paid items; speculative to include	Not included—value was not proven and therefore speculative
Whether rental income from SnyGut should be included	Joel receives ~$600/month (his share) and it should be counted	Rent is paid to the entity; no evidence Joel actually received net rental income	Not included—no evidence of net rental receipts; speculative

Hotz v. Hotz, 301 Neb. 102, 917 N.W.2d 467 (Neb. 2018) (standard of review and modification discretion)
Noonan v. Noonan, 261 Neb. 552, 624 N.W.2d 314 (Neb. 2001) (rebuttable presumption for includable income and burden shifting)
Marshall v. Marshall, 298 Neb. 1, 902 N.W.2d 223 (Neb. 2017) (flexible, fact-specific income inquiry; in-kind benefits)
Coffey v. Coffey, 11 Neb. App. 788, 661 N.W.2d 327 (Neb. Ct. App. 2003) (treatment of S-corp pass-through items and distributions)
Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (Neb. 2004) (looking through corporate structure when equity requires)
J.S. v. C.C., 454 Mass. 652, 912 N.E.2d 933 (Mass. 2009) (fact-specific test for undistributed S-corp earnings; factors to weigh)
Pickrel v. Pickrel, 14 Neb. App. 792, 717 N.W.2d 479 (Neb. Ct. App. 2006) (retained S-corp earnings not includable absent evidence they were excessive or inappropriate)
Fetherkile v. Fetherkile, 299 Neb. 76, 907 N.W.2d 275 (Neb. 2018) (material change in circumstances required for modification)